Mr. Speaker, I move that the first report of the Standing Committee on Finance presented on Wednesday, October 20, be concurred in.
I take this rather unusual step to draw the House's attention to the fact that the apparel industry is in crisis and needs the attention of the House of Commons. There is a very simple remedy found within the first report of the finance committee. It gives direction to the Minister of Finance to give relief to this industry in crisis and more specifically, from a self-interest point of view, to the 43 garment manufacturers in the riding of Winnipeg Centre. They have made representations to me that this is in fact an issue of urgency that should be dealt with in this session of Parliament. I also raise this matter because we are fast coming to a deadline where the opportunity to provide this relief will disappear.
It would be wise for me to back up a little to explain specifically what is in this first report of the finance committee and what measures we are asking the Minister of Finance to take on behalf of the garment manufacturers in my riding, and in fact the garment manufacturers in Montreal, Toronto, Vancouver and everywhere that this critical industry is located.
The issue is simple. Currently, there are duty remission orders that are in effect to help the garment industry cope with the pressures of international trade and globalization, and the pressures in recent years. Those duty remission orders have allowed these companies to keep their doors open in spite of overwhelming odds and adversity that this new global marketplace has put on them, and specific actions from this government that I will get into later. These duty remission orders are set to expire on December 31.
On January 1, 2005, these garment manufacturers will no longer enjoy this duty remission situation granted by the government. I can tell members without any hesitation or without any fear of contradiction that as soon as those duty remission orders expire these businesses will topple like dominoes. In my riding, Montreal, Toronto, Vancouver, and everywhere we have a garment industry, these businesses will fail and with them will go Canadian jobs. I do not say this to be romantic or to raise the level of rhetoric. I am stating a fact.
I raise this in the House of Commons today and take the rather unusual step of highjacking the orders of the day because these garment manufacturers have tried every other avenue of recourse to get through to the Minister of Finance the urgency of their message. They have lobbied the Minister of Finance in every way imaginable. They have asked members of Parliament from every party to lobby the Minister of Finance, which we have dutifully done in the months leading up to this urgency that we find ourselves in now.
However, we are out of time. December 31 is around the corner. Parliament will adjourn in a few weeks and we will not have the extension signed that would extend the duty remission orders that would allow these businesses to stay open. It is on the Minister of Finance's desk, ready to be signed. A unanimous report from the Standing Committee on Finance has directed him to sign it, not once but twice.
In the last Parliament, in April 2004, the Standing Committee on Finance dealt with this issue. It heard the legitimate grievances of the garment industry, acknowledged their concerns and wrote a recommendation in its report saying that the Minister of Finance should sign the extension of the duty remission orders that are due to expire on December 31. Nothing happened. Then we had an election.
The situation got even more urgent in July, August and September, until finally a new Standing Committee on Finance was constituted. Its very first order of business in fact was to revisit this critically important issue because the clock was running out. The finance committee resubmitted a report to the 38th Parliament. I have it right here. I will not bore members with all the details but I will read the first recommendation. It states:
That the federal government immediately extend, for a further seven years, the duty remission orders covering the apparel sector that are set to expire on 31 December 2004.
Our Minister of Finance should take this as a directive. This should be a marching order for our Minister of Finance, not something to be shuffled away. I do not know who he is listening to, but he is not listening to the garment industry. He is not listening to those representing the workers in those garment industry sectors who stand to lose thousands of jobs.
In my riding of Winnipeg Centre 400 jobs have been lost already directly due to the meddling of the government and its failure to sign duty remission orders. That is 400 good paying unionized jobs with benefits. These are not stereotypical sweatshops in some old fashioned garment industry. These are bright, clean, modern workplaces with a day care centre, a cafeteria, and good paying middle income jobs with benefits. They are gone. Imagine what would have to be done to attract 400 jobs like that to a riding. People would pave the streets with gold. We have knowingly and willingly allowed them to disappear from my riding.
That is the not the only one. That is just Western Glove. I can talk about Gemini Fashions and Richlu Sportswear. There are 43 of these garment manufacturers in my riding. I can say without any hesitation or rhetoric that they will topple like dominoes if the Minister of Finance does not put pen to paper before December 31.
I apologize to my colleagues for hijacking the order of business today, but this is an emergency. This is urgent. This is real business that the House of Commons should be addressing. This is not some abstract esoteric debate we are having. This is reality.
The garment industry runs on real time, not on government time, and it cannot wait for bureaucrats to have another go at this. Again, I do not know who is advising our Minister of Finance, but it is not sound advice. He should listen to the real authorities on this issue. He should listen to the garment manufacturers who want to keep their jobs in Canada, but are being forced to outsource those jobs because of an unwillingness by the government to recognize the critical important of this industry.
In other industry sectors, it seems, on the basis of a phone call, the chequebook comes out and $100 million cheques get written. I am not going to criticize any one industry sector or the government intervening to help a sector, but for God's sake help the clothing and apparel sector today because we have a deadline looming.
I raise this with some emotion and passion because my inner city riding in downtown Winnipeg is the third poorest riding in the country. The largest single opportunity for employment is the garment sector. It is a gateway for new Canadians to get into the mainstream economy because the face of the garment sector worker today is largely Filipino, Laotian, Cambodian, or Eritrean. All of the immigrant groups that are settling in my riding more often than not find their first job opportunity in the garment sector. Maybe their children go on to become the nurses, doctors and lawyers in the next generation, but they get their start, and it is a good start, in the garment sector. We cannot provide those jobs without some assistance from the government.
I urge my colleagues to look at the first report from the Standing Committee on Finance. It is only five pages long. It is of critical importance and value. It outlines the extent of these duty remission orders and the dollar value of them. It is not a huge amount of money. Nationwide it is only about $40 million. One would say that surely the industry could cope and adjust to this relatively small loss, but people have to understand that this is the straw that broke the camel's back.
It has been coping and adjusting with incredible market forces and adversarial situations for a decade or more now, 15 years really, because these duty remission orders were put in place to help the industry cope with the free trade agreement and with NAFTA. Granted, they were interim measures.
I do not believe these duty remission orders should go on forever. They are still interim measures until we can put together an action plan to help the industry cope in some more permanent way, such as, increases in productivity or whatever it is going to take to help that industry survive. In the interim, do not cut it off like this. We are standing at the edge of a precipice and we are about to be pushed over. Build a ramp so these duty remission orders can be phased out perhaps in time, but not this sudden jump.
I can tell everyone that the garment industry has to have lead time. The garment industry already has its next year's production scheduled and has planned nine months ahead. It has to plan in advance. It has planned with the confidence that the Minister of Finance would listen to it and extend the duty remission orders.
All of these companies and factories that I am talking about have set their 2005 production schedules with the comfort that the duty remission orders would in fact be extended. Yet, month after month goes by and it does not get signed and they cannot get through to the Minister of Finance in any other way.
This is why we are taking this unusual step today. They call, but their phone calls do not get returned. They do not get meetings with the Minister of Finance. They get passed off to some underling, some bureaucrat, who clearly has a bias against this type of duty remission order because they are advising the minister not to sign it in spite of overwhelming evidence of how necessary it is from one coast to the other.
It is not just my riding of Winnipeg Centre that will have catastrophic effects if these duty remission orders are not signed, but it is downtown Montreal, where there is a rich and vibrant garment sector that is hanging on by its fingernails. The riding of Vancouver East, my colleague reminds me, has a vibrant garment manufacturing sector which has also been subjected to overwhelming contrary forces.
It is a tribute, a testimony, to the strength of these Canadian nationalists, who own these companies, that they have managed to keep their jobs in Canada to date. It is almost a miracle, really. All of the evidence or all of the reason and logic would tell them to give up and do their manufacturing offshore, to do their design here and keep their books and accounts here, but do all their manufacturing offshore, because it just does not add up.
However, to their credit they have been creative and resourceful. They have tried to keep those jobs here in Canada. We are not helping them for a lousy $40 million. I am not saying that to be flippant. I know it is a lot of money. It is $40 million spread out over the whole industry. “For the want of a nail, the shoe was lost; for the want of a shoe the horse was lost”, and so the poem goes. For the want of this small amount of intervention on behalf of the government, we are about to lose this industry. I tell all hon. members, it will not be coming back. It will not be an interim plant closure. Once they are closed, they are gone.
Hon. members can tell from my tone that I am frustrated by this. I am frustrated because there are representatives from virtually every party who have personally and individually tried to reason with the Minister of Finance, first by letter then by phone calls and then by stopping him in the hallways, in the gymnasium, anywhere we can find him. We are begging, pleading, and imploring him to sign the paper that sits on his desk and save an industry.
There is no other single, more important thing he could do to preserve Canadian jobs in this session of Parliament than to sign the duty remission orders that we find here in the first report of the Standing Committee on Finance. If he needed more reason, he should listen to the Senate Standing Committee on Banking, Trade and Commerce because it recommended the same thing. We have two reports from the Standing Committee on Finance, a report from the Senate Committee on Banking, Trade and Commerce, all telling the minister to sign the duty remission orders. What do we get? A deafening silence. What does it take to get through to these people? We have an emergency on our hands.
Perhaps nobody says it better than an actual practitioner in the trade. Gemini Fashions of Canada Limited in my riding just closed a plant with 150 employees. It is a block away from my constituency office.
The owner said, “Dear Minister, Gemini Fashions is a company in Winnipeg with a very proud tradition in Canadian apparel manufacturing. We just had to close our state-of-the-art outerwear manufacturing plant on Notre Dame Avenue in Winnipeg. This facility employed 150 skilled workers. This closure was a direct result of Prime Minister Chrétien's least developed country initiative to allow duty free and quota free imports into Canada from some 48 low cost countries”.
That was a unilateral and arbitrary move that the then Prime Minister made without consulting the industry to allow least developed nations to export products into Canada without duty. The problem is that everybody knew. Global corporations simply moved their production to least developed nations and they now manage to get their product into Canada without duty. It was a bad idea. They were advised against it.
The owner of Gemini Fashion points out: “But this action was done without consideration of the Canadian apparel industry and rendered many Canadian manufacturing assets useless and nearly worthless. There has been no effective or meaningful consideration afforded to those most affected by this unilateral action of the Canadian government, and without meaningful consultation in our industry. We cannot turn the clock back now but there is something you can do. You can pass into law the unanimous report of the Standing Committee on Finance completed on March 31-04, enclosed herewith for your reference”.
Here we have a garment manufacturer who has just had to close his factory, his family business, and lay off 150 skilled workers, appealing to the minister in a letter in April 2004 to please implement the recommendations of the Standing Committee at that time. That was six months ago. The situation was urgent then. The situation is desperate now, because essentially we have two weeks to go in this Parliament to try to reason with the Minister of Finance, to implore him once again in this more public way to please sign these duty remission orders so that this industry can live to fight another day.
That is what we are asking. We are asking the minister to give the industry a pardon, what could we call it--
An hon. member: A reprieve.
Mr. Pat Martin: Yes, a reprieve. We are asking the minister to show mercy if that is what it takes. If I were allowed I would be doing this on my knees if it would help. I will get down on my knees and beg the minister to sign these duty remission orders because I do not see anything else working. I do not see reason working. I do not see logic working. I do not see political pressure working. I do not see the recommendations from the Standing Committee on Finance working.
When there are unanimous recommendations, why are they not viewed as marching orders? Let me point out that when we have a unanimous report from a standing committee, it includes members from the government side. There are plenty of members from the government side who feel the way I do, because they represent ridings in Montreal and Toronto, and I do not know where else we find Liberals but certainly elsewhere, that may in fact have garment manufacturers in their ridings and they have a moral obligation to represent the interests of those manufacturers. They have a duty to represent the interests of those manufacturers, not just some ideological bias that some bureaucrat in that department has against this particular program.
The program is flawed. I am the first to admit it. Even the garment manufacturers are the first to admit it is not perfect, but I ask the government not to cut them adrift without a safety net, without a safety boat or a lifeline. That is what we are recommending here. There has to be a lifeline extended to this industry so that we still have these Canadian jobs in my riding.
In summary, let me say that the garment industry has been critically important to the diversification of my riding. We look to the garment industry to add to the diversification of industry in Manitoba to make it a healthy economy, whether it is the aerospace industry, the motorcoach industries and the garment industry in my riding. They complement the agrifood industry that Manitoba is known for.
The garment industry is critically important as a gateway industry for new Canadians to find their footing in this new country. They are good jobs, they are Canadian jobs, and the industry is doing all it can to keep those jobs in Canada. I implore my colleagues in the House of Commons today to tell the Minister of Finance to help us keep those jobs Canadian and in Canada.
Mr. Speaker, I am glad to enter into the debate on the motion. I feel some authorship of this issue in the sense that back in April, 2004 I had the great honour to chair the House of Commons Standing Committee on Finance. We had hearings on the topics of duty remission and the zero rating of tariffs on textile inputs. We wrote a report and tabled it in the House of Commons.
Subsequent to that, we had a general election in Canada and therefore on the dissolution of Parliament the report died. However the new chair, my colleague for Saint-Léonard—Saint-Michel, and the members of the reconstituted Standing Committee on Finance essentially re-endorsed the report and re-tabled it with one minor exception. They made a wording change in one of the recommendations that had to do with the undertaking of a study on the benefits and cost.
In terms of the recommendation around duty remission and the tariffs, the newly reconstituted Standing Committee on Finance endorsed the previous recommendations and that report was tabled in the House. What the member for Winnipeg Centre is arguing is that the House of Commons should endorse that report and the recommendations that were contained in that report.
I must say that we had some very compelling arguments made to us in the House of Commons Standing Committee on Finance back in April. What we have here are two different industries, although interrelated, the textile industry and the apparel industry.
If one were to go back to the days of the free trade agreement and NAFTA, everyone, certainly in the province of Quebec and perhaps across Canada, would have said that with the introduction of the FTA and NAFTA the textile industry in Canada was doomed and that it was long gone because it just could not compete with some of the huge textile manufacturers in the United States and around the world.
What we found however is that the textile industry in Canada was able to reorient itself and focus on some core competencies. It basically over time moved away from some of its traditional types of business, which was apparel and apparel related, and moved its industry more into industrial products, making carpets, accessories for cars and anything related to textiles in the industrial market. Therefore the textile industry has been able to survive and prosper.
We also heard that the apparel industry could not survive under FTA or NAFTA, but we have had some big success stories in the apparel industry. A company in Montreal named Peerless Clothing Inc. appeared at our Standing Committee on Finance. We all congratulated the company for the amazing work that it had done. It has been able to carve a niche in the United States market on men's suits and has turned its business into a multi-million business.
However we now have a changing world again. We have a changing world in the sense that there are companies in China, for example, and other parts of Asia where labour costs are very low and they have started to compete in a very big way. In fact the World Trade Organization, members of the House and members of the apparel industry and textile industry support moves by our government and governments around the world to remove some of the tariff protection that currently exists or has existed. They want to see the least developed countries having the opportunity to market their products around the world, which would create jobs, economic opportunities and economic development in the least developed countries of the world.
We heard at our committee that the apparel and the textile industry supported the WTO initiative to lower tariffs generally to provide opportunities for these least developed countries to realize their full potential when it comes to textiles and apparel.
Having said that, that creates some new challenges. We have some cost competitiveness issues where it is very hard for companies in Canada that pay a decent wage to compete against some of these countries in Asia and in Bangladesh and China. Therefore, there are some government programs and initiatives that help these industries.
In the context of the apparel industry, the first one is duty remission. I have been told that we have something like 200 companies in Canada that benefit from the duty remission program, which is a program where companies that manufacture apparel in Canada are able to get a remission on duties on some of the apparel products that they import into Canada.
I believe that program costs the government somewhere in the order of $26 million to $30 million a year. Some 200 companies in Canada benefit from that. The list of the companies that benefit was structured sometime in the 1980s. We would have to ponder how companies made it on to the list and how some did not, but generally, as I understand the criteria, if a company manufactured apparel here in Canada it got the duty remission.
Without the government taking any action, that duty remission will expire at the end of December of this year. The apparel industry is saying that it will be caught in a very difficult position if that duty remission order expires and there is no renewal at the end of this calendar year.
One can argue that the apparel industry was told when the duty remission order was renewed seven years ago that it would not be renewed again. One could fault them for not adjusting to the new competitive reality. However, maybe the industry did try to adjust. For example, I know of a company in the Toronto area that is on the duty remission and it received somewhere approaching $4 million a year. This company manufactures a lot of shirts in Canada and it employs a lot of people.
I do not have any apparel or textile companies in my riding. I became seized with this issue when I was the chair of the Standing Committee on Finance but I became more aware of some of their issues when they appeared in front of the committee. Some of these companies rely on duty remission to remain competitive. The very legitimate question is whether the apparel industry in Canada can be competitive in the medium to long run. I think that is a valid public policy question.
I do not pretend to have the answer to that. I do not know enough to say that maybe they have not been aggressive enough adjusting their costs or enhancing their productivity. I do not know enough to say that categorically. However, by the same token, I do not know enough to say that they have exhausted all the productivity enhancements that they could employ and therefore are still in a position of being non-competitive.
I think we need to examine this. My own personal preference would be to buy a bit of time. I do not think we should be stopping the duty remission cold turkey on January 1. I do think it would have an impact on jobs. I think it would have some economic consequences and consequences for people who are currently employed in these apparel industry factories and manufacturing facilities.
My own recommendation is that the government renews duty remission for seven more years, which is what the finance committee recommended. I understand that the finance committee can make recommendations and the government actually has a very good record of responding to recommendations from the Standing Committee on Finance, but in fairness, the Standing Committee on Finance looks at particular issues. The finance minister and the government have to look at a whole range of competing resource demands to come up with a budget and a fiscal plan.
I would like to see some accommodation on the duty remission. Whether it is renewed for a full seven years at the full rate is a question I think the Minister of Finance should ponder. I am not privy to all the competing demands on the fiscal resources of the government.
My only point is that I think it would be a mistake to just drop duty remission on January 1. I would like to see the government extend it somehow. It would make a very good study for one of the committees or a joint committee of the House to better come to grips with the textile and apparel industries, how they relate, what their competitive position is in the medium to long term, and what the best way would be for the government to involve itself.
We have programs in the textile industry. One of those programs is called the CANtex program. Industry Canada provided some funding for CANtex a year or two ago to help the textile industry. In fairness, it takes a while for these programs to get up and running, but when I speak to the textile or apparel industries they say that they still have not seen the benefits from that program.
Admittedly, they have their own economic axe to grind and economic interests at stake, but we as politicians have to sift through a lot of information and in our own judgment at some point we have to make decisions on where we stand on certain issues. We cannot always believe one stakeholder or the other or the government.
I have been told that this program has not really caught hold yet and that it does not have a lot of traction. Maybe it needs more time to get going, but from the point of view of the industry, it does not see CANtex as a replacement for duty remission or any of the tariff relief that it is looking for.
Many of my colleagues on this side of the House and members of the other parties who were on the finance committee were seized with this issue, but I would like to mention my colleague from Ahuntsic in Montreal who has been on a crusade on this particular issue. Chabanel Street, which is in her riding, is where a large part of Canada's apparel industry is located and she has been on a crusade about this.
My colleague, the member for Beauce, has been integrally interested in this and pushing for resolution. My colleague from Guelph has been very involved, as have many others on this side. I appreciate the initiative the member for Winnipeg Centre has taken on this but it is an issue that has been discussed and advocated by many colleagues on this side of the House as well. It is not as though this is a new issue. This has been around for a while.
The Parliamentary Secretary to the Minister of Finance talked about its complexity. I understand that complexity should not grind things to a halt but it is complex, particularly if one looks at the interrelationship between textiles and apparel. If we do something for the apparel industry will that be good for textiles? If we do something for textiles will that be good for the apparel industry? Or, will it be good for both? It is not easy.
One of the recommendations in the report from the Standing Committee on Finance was to eliminate the tariffs. Recommendation 2 states:
That the federal government immediately end tariffs on inputs which are not produced domestically. Textile producers seeking continued tariff protection should be required to establish that they sell their products to Canadian apparel manufacturers.
I heard some of the representatives in the textile industry saying that at any point in time no one can freeze what textiles are produced domestically in Canada. What textiles are being produced domestically in Canada today might not be the same as the list that applies next week. There was discussion that it could be dealt with through regulation, that there would be a list and that any time that changed we could change the list. We also have the textile industry selling raw materials into the apparel industry. Therefore whatever is done on one side starts to impact on the other.
I would like to see the House of Commons do more work on understanding this industry better but in the meantime I would like to see something done on duty remissions. I do not think we should stop it cold turkey. I would like the government to deal with recommendation 2 in some shape or form.
There is a misconception that if the House of Commons concurs in the report of the Standing Committee on Finance, it does not necessarily mean the government is obliged to implement the precise recommendations. It does mean that the House of Commons endorses the report, which would be a clear signal to the government that the House would like something done about it.
Having said that, the government does not have to accept every word of the recommendations. It has a decision to make. It is charged with governing on behalf of all Canadians. It could select some of the items, or some mix of them, and come up with a policy stance that deals with the issues which have been raised in a substantive way and perhaps not necessarily implement every recommendation of the finance committee.
We should be concerned about is this. The apparel industry and the textile industry employs many Canadians. We owe it to them to ensure that we have studied this indepth. I do not think we have done that at this point. Perhaps some of the officials have studied it, but we in the House have not studied it in the depth required. I would like to see a joint committee of the House of Commons look at these industries in more depth. In the meantime, measures can be taken that respond to the recommendations in the report.
I am more familiar with the apparel industry. The apparel industry is strong in Toronto, perhaps not as large as in Montreal. There is a large apparel industry in Winnipeg. If duty remission is stopped cold turkey, there is a real risk that some of these companies will have to look at their options. One option would be to move their facilities to Mexico or to some other country where they could get productivity or cost advantage, for whatever reason. It would be a shame if we lost these facilities and jobs to some other country because we did not act when we should have.
This is an important industry for Canada. If we look at the number of jobs, the apparel industry employs somewhere in the vicinity of 97,000 jobs in Canada. The textile employs something like 47,000 employees. These are important industries for Canada. Jobs in the apparel industry are mainly in Montreal, Toronto, Winnipeg and Vancouver. Jobs in the textile industry are mainly in small cities in rural areas of Quebec and Ontario.
I hope the government acts. I know members on this side of the House have been seized of the issue. I congratulate the member for Winnipeg Centre for bringing it into the chamber for debate. I hope and encourage the government to act on the recommendations, but not necessarily verbatim, which would be good. However, it should respond in a very aggressive and proactive way to these industries. In the short run, they need the government's help. We need to understand these industries better so we can decide where the resources should be best applied in the future.
Mr. Speaker, I would like to start by saying that we in the Conservative Party support this motion for concurrence. This motion moves concurrence in the first report of the standing committee, as we have been debating this morning, “Duty Remission and the Zero-Rating of Tariffs on Textile Inputs: The Canadian Apparel Industry”.
I want to share some background on this because, as the revenue and customs critic, I was quite involved at the time we actually pushed this report forward. This issue first came to the finance committee during the third session of the 37th Parliament when we heard from witnesses on amendments to Bill C-21, an act to amend the customs tariffs. As I mentioned, I was in charge of this at the time. The issue was that the duty remissions which underpin Canada's apparel industry are set to expire on December 31, as we have heard.
Bill C-21 also did not look at the overall tariff structure or textile imports into Canada. That is why we decided to continue on. We said that we would deal with the remission issue but then would ensure that we reviewed the overall tariffs to see what we could do as a committee to work with the industry, and then finally we would look at another problem within the industry, one that dealt with gender biases.
That is what I will do. I will quickly read over the recommendations. We have been focusing on the first one quite heavily this morning, but I think the other two are just as important.
The first recommendation states:
That the federal government immediately extend, for a further seven years, the duty-remission orders covering the apparel sector that are set to expire on 31 December 2004.
Recommendation two states:
That the federal government immediately end tariffs on inputs which are not produced domestically. Textile producers seeking continued tariff protection should be required to establish that they sell their products to Canadian apparel manufacturers.
Finally, the third recommendation states:
That the federal government immediately undertake a study of temporary adaptation measures to enhance competitiveness, as well as the benefits and costs of eliminating tariffs on imports of fabric for use in the Canadian apparel sector, the types and quantities of products produced by the Canadian textile industry and the practice of tariff differentiation on fabrics based on their end-use. The results of this study should be tabled in Parliament no later than January 31, 2005.
That is what the original report said. From what I understand, there may have been a recommendation on or an amendment to that particular date.
Mr. Speaker, I just want to remind you that I will be splitting my time with the member for Cambridge.
All those recommendations, as we can see, are very clear. I think they were agreed to by all members, as I have mentioned, and a lot of thought went into structuring them in such a way that they would not cause problems for the finance department, especially in regard to extending those duty remissions in the meantime.
The remission orders have been around for quite some time. They were first introduced around 1997. There are remission orders for various textiles. Specifically, there was a new shirt remission order that provided shirtmakers with transitional assistance to help them remain in the shirt business in Canada. Similar remissions are also being considered for manufacturers of outerwear apparel and women's blouses and shirts. Shirting fabric and outerwear fabric are sub-sectors that are currently receiving assistance under existing remissions. This means that the duties on those particular areas of fabric will be reduced.
Duty remissions will enable Canadian manufacturers to complement the products they manufacture in Canada so that they would help to continue to encourage our industry to grow and flourish here in Canada. That will also help the textile apparel manufacturers in these import-sensitive sectors to adjust to the same kind of increased competition faced by shirtmakers. This recommendation calls for the extension of these remission orders for the next seven years. This was an easy decision for the committee to make and was reached unanimously, as I mentioned.
The surprising thing about it, as I mentioned in a question to the parliamentary secretary, is that there has not been any action by the government even though many representatives of the finance department themselves said that this issue needs to be dealt with and that we were getting closer to the end of the deadline. Why was there not greater attention paid to what other help is required to keep our industry competitive? Why was there not greater attention paid to the tax structure and the tariff structure?
My colleague from Peace River raised the idea of whether we should even be placing tariffs on these particular products here in Canada, seeing that many of the companies are importing these products that are not produced here. It seems to put them at very much of a competitive disadvantage with all these other competitors around the world. If the government had taken action at the time, maybe we could have moved this industry forward and we would not on the eve of this deadline be faced with this very important motion here in the House.
In the words of the committee:
--remission orders are, by their very nature, an incomplete and ad hoc method of addressing the needs of the entire Canadian apparel sector with respect to input costs: some textiles and sub-sectors are covered, while others are not. Moreover, we note the comments made by witnesses that the 31 December 2004 expiration date of the duty-remission orders is fast approaching, and companies need to make procurement and employment decisions in the immediate future. Consequently, it is vital that the federal government take immediate action to, at a minimum, maintain the current system.
Hopefully that cannot be impressed upon the government too much. I hope that message will get to the finance minister and that action will be taken immediately.
In my remaining time, I would like to focus on the last two recommendations.
The second part of the report details the mishmash of bureaucracy that government employs to deal with determining what is Canadian-made fabric and what is not. Simply, this recommendation calls for a streamlined process to determine if a fabric is made in Canada or not. If it is not, then it should not be entitled to tariff protection, as this raises the cost of importing it into the country. If it is, then it is necessary to see that the fabric is being put toward Canadian uses and not just being produced because of outdated tariff protections. This initiative is estimated to save the apparel industry approximately $9 million a year in unnecessary duties.
As I have said, extending this would specifically help Canadian companies with their inputs. Some of these products are not available in Canada. Clearly that is something of which we should be cognizant. If we are not producing these products at home, we should lower those tariffs because it would give Canadian companies the opportunity to access those particular products. A good example of this that was brought out in the committee was the idea of lycra or other poly-synthetics that are not produced here. Importing these products is very expensive.
Finally, the third recommendation dealt with the end use of fabrics when they are imported into Canada, especially the built-in gender bias that I spoke about. When textile importers bring in a fabric, they must declare what the end use of that fabric will be. For instance, if silk is imported to produce ties for men, the tariffs are not high; they fall under a preferential tariff. However, if silk is imported to produce women's blouses, it is subject to higher duties and tariffs. Therefore, women's blouses are more expensive because the fabric costs more to bring into the country.
It is really bizarre in this day and age that this sort of differential exists. We in the Conservative Party find it really unreasonable for the Liberals to be promoting this sort of gender bias in today's society. It does not make any sense. Gender bias could be eliminated with that simple recommendation.
In the little time I have left, I want to impress upon the House, as I did during the period of questions and comments, that this issue has unfortunately been dragging on for far too long. This affects our industry from coast to coast.
The committee received a number of submissions in the past. It studied the issue a great deal in the past as well. It is not like this has not been lingering around, especially when it comes to the extension of the duty remissions. I think it is clear. There was unanimous support on the committee. There seems to be unanimous support in the House, from what we have heard from the previous chair of the committee and members of the NDP. I am sure we will hear that from the Bloc as well. It seems that there should be some indication from the Minister of Finance that this particular act of extending the remission orders will be put in place.
This has really left the industry in a bit of a lurch. I have to impress this upon members. I was talking to some of the members of the industry. They are making plans for next year. They are trying to be competitive and want to continue to employ Canadians, but they are trying to deal with an industry structure that is very outdated and not responsive to the challenges they are facing.
I agree with the parliamentary secretary when he says it is up to the finance minister, that the finance minister does not have to adopt all the recommendations in this report. That is fine. We will deal with those other recommendations very soon, I am sure, but clearly we have to extend those remission orders so that our industry can feel safe about continuing to operate in this country, continuing to employ Canadians and still remaining competitive.
I will impress again on the Minister of Finance that he should not wait another seven years to deal with this issue. Let us address the tariff structure. Let us ensure that our industries remains competitive here in Canada. Let us not drag our feet on this any longer.
Mr. Speaker, I support the motion that is before the House this morning. The unfortunate truth is that this motion is required to be before the House because the government has failed to act. It has failed to act in a timely fashion despite repeated requests, despite ample time, and despite instructions to do so by the House and the Senate.
Duty remissions which assist the Canadian apparel industry to solve previous problems created by unfair tariffs are set to expire December 31, 2004. This issue has been before the House many times. The government has shown a complete lack of interest requiring this action by the House today. The government has failed to act. I cannot tell if that is a result of a lack of interest, a complete inability to grasp the complexity of this issue, or incompetence, or maybe it is a bit of all of the above.
It certainly lends credence to the old adage that if this government owned McDonald's, a Big Mac would take three weeks to prepare. Frankly, the motion that is before the House this morning is simple. It is a simple fix to a simple problem. It is a fix that was unanimously supported, discussed and voted on by an all party committee. The finance committee made three relatively brilliant recommendations to what appears to be a debacle from past issues raised by the government and past attempts to fix mistakes.
What is this minister doing? The Minister of Finance is discussing it with his senior staff considering other things and looking at other solutions. That is great and indeed necessary, but these people need help now. The minister has taken it upon himself to go in a different direction. What for? He has his marching orders. He has been instructed by the House and by the Senate. If there are other solutions, and there will have to be to fix this package of bungled bureaucracy in government, then we can look at those too. No question about that, but please, deal with this issue today.
The amount of bureaucracy in this area is equally astounding as it is in all areas that the government touches. If it is not a study, or in the case of this present regime, an investigation or an inquiry, the government spends far too many tax dollars on programs that just do not seem to be necessary. Members will recall that this is the government that spends $20,000 to hand out $3,500. This entire tariff program is wrought with the same kind of bureaucracy.
Does it make any sense to anyone that if we were to import silk and claim we were going to use it to make a tie, we would pay a lot less than if we said we were going to use it to make a woman's blouse? Gender inequity is appearing everywhere in the government. Perhaps the minister intends to fix this bungling too and so he should, but that can wait. This cannot. This same solution was put forth by the Prime Minister who was then the Minister of Finance in 1997 and it had no global impact and no negative effect.
When owners of John Forsyth in my riding of Cambridge called me a few months ago, they said the issue had been going on for far too long and the deadline was fast approaching. They were at a loss to tell me how such a seemingly simple solution was not solved or implemented especially since the member in my riding at the time was from that side of the House. How is it that half of the factories are in ridings from that side of the House? How is it that it always seems to be the opposition that has to get the job done?
I offered to meet with the people from John Forsyth immediately. In fact, I offered to meet with them the very next day because I took this issue very seriously. I have since met with the owners, the manager and the workers personally. When I entered John Forsyth plant in Cambridge, above the rhythm of finely tuned sewing machines and expensive machines that precision cut over 100 sheets of fabric at one pass, I saw an industry that has remained on the cutting edge, not to use a pun. This industry, whether it is Hathaway in Guelph or Miller Shirts in Montreal, has done its very best to stay competitive.
I also saw bulletin boards with pictures of picnics and celebrations of these workers and a corkboard with hundreds of pins identifying the locations of the different countries from which these hard working Canadians came from. The most visually impacting thing that I saw was the people themselves and a management team which showed deep concern for its people. I saw an owner who was gravely worried, not only for his own future but for the workers that he had come to know. I saw 200 workers behind which were families with children, homes with mortgages, and educations waiting to be undertaken.
I saw Canadians with jobs. I saw people with worry, indeed many with tears. I also saw a careless government that has allowed these people to teeter on the edge of collapse and to go needlessly week after week while the minister sits, thinks, discusses it and appears to be doing nothing.
I have asked the minister by letter, by phone, by e-mail and in the House on numerous occasions, and still no action. I wrote a letter to every single member whose ridings had these very factories in them. I informed them of the problem and the simplicity of this particular solution. I asked all of them, Liberals, NDP, Bloc and of course my own Conservative members, to join me to pressure the minister into doing the correct thing, not in a few weeks forcing these people to suffer longer and longer, not in a few weeks debilitating the managers and owners of these companies from planning and forecasting, but now.
In my riding there are 200 workers and their families are in shambles because of the government's inability or refusal to act. Rather than flying around the country campaigning, perhaps the Prime Minister should have stayed home and addressed the inadequacies of his ministerial departments. Rather than standing in the House a few weeks ago, bragging and taking credit for jobs the finance minister claims his government created, any logical thinking person would give at least equal attention to the jobs we already have.
Let us talk about the minister singing his own praises. On November 5 in response to my question regarding this issue in the House, the minister bragged that the government had created thousands of jobs. The fact is that last year, of the jobs created, only close to 40% were in the public sector which is paid for by our taxes. Of those jobs that were created in the private sector that he bragged about, some 60,000 of them were classified as self-employed, which is defined as earning one penny or more.
Further, statistics during that same period the minister was bragging about creating jobs, unemployment went up by 10,000 people, 6,000 in the manufacturing sector. These were jobs we had and were lost. This is exactly why we are here today. We are here once again to speak to the government's inability to step up and step off its high horse, to stay in touch with Canadians, and emphasize its inability to come up with ideas that do not create more collateral damage than they are designed to fix.
We care on this side of the House for all Canadians, new and existing, those with and without degrees. Those we care about are with and without jobs. For the community of Cambridge and of course the entire country as a whole, I support this motion.
Mr. Speaker, I will be splitting my time with the hon. member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup.
It is a pleasure for me to take part in this debate. The Bloc Québécois will be supporting the motion of the hon. member for Winnipeg Centre. We feel that the government's attitude toward this motion and toward the report from the Standing Committee on Finance is totally incomprehensible.
Moreover, the speech by the member for Etobicoke North has not fully convinced me. In general terms, he is telling us that the committee adopted this report unanimously but that now the government is not obliged to apply it in its entirety. That is true, but the House could at least use it to encourage the government to act.
This position is all the more incomprehensible because the problem is unavoidable. We all know that, following on a decision made 10 years ago by the GATT and the WTO, on December 31, quotas will be disappearing and tariffs will start to decrease. This will pose a serious problem for our apparel industry and has already become a problem for the textile industry.
The report before us was a unanimous report. I was sitting on the Standing Committee on Finance at the time when it adopted this report, in April 2004. The Liberals voted in favour of the report, as did the New Democratic Party and the Conservative Party. This is even more incomprehensible, the problem is so impossible to ignore that, just this afternoon, the Subcommittee on International Trade, Trade Disputes and Investment will be looking into the issue.
We had the contribution of a committee that had been unable to table its report because an election had been called, which was a first step toward resolving a problem that cannot be ignored. Liberalization of trade will have, and indeed has already had, an impact in the textile and apparel industry.
The apparel sector is already benefiting from the effect of the decision, which we supported, to unilaterally eliminate tariffs on apparel from 40 of the world's poorest countries. This tariff reduction on apparel from less developed countries has had an impact. According to testimonies heard at the time at committee, in 2003, imports from countries like Bangladesh or Cambodia increased dramatically.
Nevertheless, I would like to come back to the substance of the issue. We support the motion put forward by the hon. member from the NDP, but we cannot understand the government's position. We have to look back at the recommendations made by the committee at the time. As hon. members will see, these recommendations make good common sense in the current situation. They are inadequate—and everyone will agree on that—because the problem is much deeper and more structural. They do however represent unavoidable steps in resolving the structural problems facing the textile and apparel industry.
The first recommendation was that the federal government immediately extend, for a further seven years, the duty-remission orders covering the apparel sector that are set to expire on December 31, 2004. What does this mean? The member for Berthier—Maskinongé and I had a chance to visit Empire Shirt, the oldest shirt maker in Canada. It has been making shirts for more than 100 years, and the situation became very clear to us. On the volumes that garment importers and manufacturers were importing in 1995, the federal government decided to remit the customs duties to them.
They, in turn, were able to invest that money to keep their plant competitive. As a result, the company that has been around for more than a hundred years still has a hundred or so employees. If it had not had access to these duty remissions, the company probably would have either closed or be on the brink of closure, and the removal of quotas on December 31 likely would have been a death sentence.
Nonetheless, thanks to these duty remissions, this company was able to invest, improve its technology and also make bids including some imported shirts and some made in Louiseville. As a result, it got contracts not only in Quebec, but throughout Canada and the United States. These contracts came from public companies, police forces, and retail or fast food chains.
The duty remissions were granted by the government in 1995. The whole list of remissions is included in the document. This company—like many companies, probably—adapted to the new rules of the game.
The question, then, is this: Why would the government let these duty remissions end on December 31, even though the tariffs are not disappearing? On December 31, the quotas for imported clothing from China, India and other places will fall, while the other less developed countries were already covered by the unilateral decision made several years ago. The tariffs will not disappear overnight.
Thus, my company, Empire Shirt in Louiseville, will continue to pay duties. Perhaps these duties will be reduced over three, five or seven years. I do not have the details; I will have them this afternoon when we meet departmental officials. Having paid these duties, such businesses can expect remission of duties for quantities on which the federal government has already granted them. If not, the businesses will not only have to face the challenge of the borders being opened in terms of quotas, but also will have to pay duty on imports of shirts or clothes, without any remission. At that point, of course, their competitiveness is in danger.
I have told the House about one case, but I am convinced that in the industry as a whole these duty remissions are one way to help companies face the new situation.
That was the first recommendation. I am convinced that we all now agree it is only common sense.
The second recommendation is:
That the federal government immediately end tariffs on inputs which are not produced domestically. Textile producers seeking continued tariff protection should be required to establish that they sell their products to Canadian apparel manufacturers.
I have an example of this. A textile product is manufactured in China and sold to a company in Bangladesh. The shirt or other garment manufactured in Bangladesh enters Canada without customs duties because such duties were unilaterally eliminated. As I mentioned, the Bloc Québécois agrees with this. On the other hand, what is incomprehensible is that a Canadian or Quebec manufacturer importing the same textile—the same cloth—from China, will pay the duties. Not only have we unilaterally agreed to drop customs tariffs on clothing coming from Bangladesh, but what is more, we penalize our Canadian and Quebec manufacturers making the same type of garment. It is hard to imagine someone being more masochistic than that. We have seen, though, that this is not the only area where masochism seems to be the rule.
This recommendation does not propose to completely liberalize the textile sector. On the contrary, it asks the federal government to immediately end tariffs on inputs which are not produced domestically, so as to give our producers a chance to compete with products that come from third world countries.
Again, we were in agreement with the unilateral abolition of these tariffs. We are simply asking that, in the case of textiles inputs not produced in Canada, the government immediately end tariffs, so as to give our producers a level playing field to allow them to compete with foreign products.
The third recommendation reads as follows:
That the federal government immediately undertake a study of temporary adaptation measures to enhance competitiveness, as well as the benefits and costs of eliminating tariffs on imports of fabric for use in the Canadian apparel sector, the types and quantities of products produced by the Canadian textile industry, and the practice of tariff differentiation on fabrics based on their end use. The results of this study should be tabled—
I agree with the former Chair of the Standing Committee on Finance that the two recommendations are a necessary but insufficient basis to solve the problem in our apparel and textile industry so that it can be competitive. What are proposed are adaptation measures.
There is currently a great deal of research and development going on in the apparel and textile industry, but these efforts are not recognized by the federal government the way they are in other industries, such as aerospace and automobile. In fact, this is just a matter of fairness.
Mr. Speaker, what a fine name for a riding. I rise today to speak to the debate on this motion and to congratulate the hon. member who presented it.
Reference was made to the report prepared by the Standing Committee on Finance in April 2004, in which a heartfelt cry was made to say that, in the apparel industry, as in the textile industry in Canada—but the report specifically talks about the apparel industry—there are some real structural changes that are the result of the GATT agreements. On December 31, the quotas will be eliminated and the tariffs will start to decrease. This industry will have to overcome an extraordinary and very difficult challenge, which it is already facing right now.
Knowing that these things are in place has an impact on investment choices. The apparel industry is the tenth largest manufacturing sector in Canada, with more than 93,000 employees working in 3,900 establishments. It accounts for 2% of Canada’s total manufacturing gross domestic product, 4% of manufacturing investment and 4.4% of total manufacturing employment.
This is an important field and also one where newcomers to the country often get their first job. People who work in this industry often have not had much formal schooling, but they develop expertise on the job, and now are likely to find themselves with no future.
The report asks whether, in preparation for the coming storm, certain measures could not be put in place. This is the outcome of consultations with the industry.
The first of these would be the remission of duties. It would be an exemption from customs duties, in whole or in part, from import charges or taxes on imported products.
Remission orders have been issued for a variety of products: tailored collar shirts; outerwear greige fabric; shirting fabrics; outerwear; blouses shirts and co-ordinates; apparel fabrics. All sorts of specific types of garments or fabrics have been allowed remissions in the past, particularly at the time agreements like the free trade agreement were adopted.
Now we have a new era, one that will start on December 31, 2004. The industry is asking for a least a chance to prepare so that it can come through this properly. Extending the remissions by several years so that it can continue to earn revenue on these products would help the industry out.
As my colleague has said, this is just part of a far more general program the government must take action on.
Today the House is going to send a message to the government that a far more structured intervention is required than there is at present, if only in connection with the third recommendation in the report.
The third recommendation states that the federal government must immediately undertake a study of temporary adaptation measures to enhance competitiveness as well as the benefits and costs of eliminating legislation on imports of fabric for use in the Canadian apparel sector. These are things that ought to have been done a long time ago, but we realize they were not done properly.
I am aware, particularly in my capacity as Industry critic, that there has been a kind of laissez-faire attitude in the Department of Industry on this, which is the source of the government's inaction.
The federal government, in its strategies for various international trade sectors, has made choices. It has accepted that some sectors must be sacrificed. The spirit which prevailed in the determination of these sectors is still active, but there are sectors that deserve to be specially supported.
The parliamentary secretary was telling the House about the CANtex program. Yes, it is interesting, but the amount of money involved in it is inadequate. In addition, there are concrete, short-term measures that should be taken, and that are not being taken, such as the measures in the report we have before us.
Would it not be appropriate for the members of this House to agree to ask the government to reply to the report? The parliamentary secretary had a question, namely, whether we were in favour of recommendation No. 2. Certainly, this is a field involving many complex choices. We must look at the consequences of our actions.
Nevertheless, the recommendation that has been made is logical in one way. It gives our garment industry access to textiles without it being penalized, while the rest of the world is given entry without tariffs into the Canadian market. The current situation is unacceptable. People producing garments in Canada cannot have the same advantages as people who produce garments outside the country. Something about that needs to be corrected.
Should we get into the specific details of the recommendation? With regard to imported textiles, we must be very clear that there is no question of their competing with textiles produced within the country. In my opinion, such things can be specified.
Nevertheless, today, the garment and textile industries are feeling abandoned by the federal government, which has engaged in a laissez-faire policy that is not properly applied to this sector and will have very negative consequences on the jobs involved.
Even in an economy like ours, which is working well at the moment—in North America and all over the planet, there is growth—there are sensitive sectors like this, which often have a major impact on communities.
It has become apparent that in the distribution of industries in the textile and apparel sectors, entire municipalities have been dependent to some extent on the continuity of employment by a business, and sectors in some big cities, such as Montreal, are also dependent. Thus, it is important that measures be taken by the federal government.
We have accepted the fact that there will be a free market. We have seen the benefits it can have for developing countries. We have accepted all that and that is what we want. We are prepared to work in that direction.
What we find unacceptable is that the federal government is making its own manufacturers less competitive than their foreign counterparts when it comes to selling products on Quebec and Canadian markets. That is what we find unacceptable.
The Bloc Québécois supports this report and wants it to be adopted by the House and to have the government respond to it as soon as possible. In any event, the federal government should—in this sector and in others—announce its industry strategy as soon as possible so that the industry knows what to expect—and not just piecemeal programs.
In my opinion, that is the message hon. members in this House must send by adopting this report.
I am delighted to have this opportunity to discuss the motion.
I appreciate this opportunity to respond to questions concerning the first report of the Standing Committee on Finance entitled “Duty Remission and the Zero-rating of Tariffs on Textile Inputs”.
My hon. colleagues are no doubt aware that the Standing Committee on Finance agreed on October 19 to reissue the fourth report from the 37th Parliament in the current session of Parliament and to present it in the House with a request for a global response from government.
The report raises some important questions of interest to the Canadian textile and apparel industry. I can assure the House that it is a priority of this government to proceed as expeditiously as possible with its consideration of the committee's recommendations.
The Canadian textile industry is one of Canada's oldest manufacturing industries. It has evolved through innovation and modernization to become a key player in the provision of specialized fibres and textiles in a highly competitive international market.
Established over 150 years ago in small communities that offered a stable labour supply and rivers ideally suited for water generated power and dye and finishing, the industry was initially based on the manufacture of yarns and fabrics for natural fibres.
Currently the industry is located mainly in Quebec and Ontario. It is heavily capital intensive and uses natural and man-made fibres and yarns. It supplies over 150 industrial and other customers in Canada and worldwide.
While this industry, as I mentioned, is currently mostly in Quebec and Ontario, it is not exclusively. Windsor Wear still operates in Windsor, Nova Scotia. We still have operations in Truro, Nova Scotia. Regrettably, we lost two operations that were in my riding, Dominion Textile which operated for over 150 years, and Britex, which I believe operated for 40 years. We have another one, Bonda, which still operates, but not at the level that it once did.
That these three examples from my riding, very old and very good companies, were able to disappear speaks to the fragility of this industry. It is important that we take all measures possible to protect this industry and give it the chance of success.
We have to seriously look at what the market is doing over time, what industry is doing over time and how we can make sure it is there through some short term or maybe punctual examples of assistance or aid that we can give, such as what is being proposed here.
I look forward to seeing the minister's response and what actions are taken. I was a member of the committee that supported these motions originally. If there are other actions that are just as good or better, it would be important to review them. However, I am looking forward to the response.
As noted by the Canadian Textiles Institute, Canada's textile manufacturing industry has transformed itself in the last 22 to 25 years through substantially sustained capital investments. The result is an industry that is modern, efficient and increasingly capital intensive. It is a major user of high technology and a provider of quality jobs for thousands of Canadians.
In doing so this sector has clearly illustrated the role that progressive federal economic policies have played over the course of the last decade in encouraging the innovation and investment necessary for Canadian industries to compete in the 21st century global economy. However, we must never forget what I previously said about those industries that did not make it and where we may have been able to implement other measures that would have assisted. We have to look at every way we can assist the ones that might find themselves in similar situations in the future.
The report by the standing committee reflects comments made by witnesses from the apparel industry regarding the status of current tariffs and duties. I remind the House that the six duty remission orders for textiles and apparel noted in the committee report were implemented in the late 1990s.
Those companies that are eligible under these orders can import certain textiles and apparel products without having to pay duties on them. The orders were designed as a transitional measure to help textile and apparel manufacturers adjust to an increasingly competitive trade environment. These six orders are set to expire on December 31 of this year.
The government recognizes that Canadian textile and apparel industries are facing a competitive international environment. Export competition from low wage developing countries, such as China, Bangladesh and India, will increase in 2005 when all countries remove their quotas on textiles and apparel. The agreement to eliminate these quotas was made in 1994 under the auspices of the World Trade Organization.
The standing committee report has recommended the immediate extension of these remission orders in order to compensate for greater competition from low wage developing countries. It also calls for the elimination of tariffs on textiles not made in Canada and for a study to be conducted on the benefits and costs of changing the current tariffs on imports of fabric.
I would like to assure all hon. members that the government will consider the recommendations of the Standing Committee on Finance. It will continue to do what it can to help these important industries.
That said, I would be remiss not to mention the progress the government has already made working with the apparel and textile industry in Canada. We have already committed to continue to work toward an integrated North American market for Canadian apparel and textile products and to consider any proposals made jointly by the apparel and textile industries for new market developments through an outward processing initiative. We have committed to continue to protect against illegal transshipment of imported apparel and textile products and to use existing tools as appropriate to respond to industry complaints regarding injurious import surges.
I was listening to the member of the New Democratic Party. It would seem reasonable to me to assume that the NDP would agree with the motions that have been made on the actions taken to assist developing countries and the people most at risk. We must make sure that these are not contravened, that people do not get around what we want to do for assistance, to hurt our industry. That requires vigilance. We have to see if we are doing enough in that area.
We have committed to work through the employment insurance program to continue to meet the needs of workers adjusting to changes in the industry and to ensure, through ongoing support for human resource sector councils, that employees obtain the skills they need to respond to the challenges of a rapidly changing labour market.
The Canadian apparel and textile industries program was created on June 27, 2002 to increase the international competitiveness of the apparel and textile industry in Canada. It does so by supporting the application of new technology, better marketing strategies, identifying niche markets and diversifying products.
Many of the Canadian apparel and textile companies already compete successfully in international markets. By identifying and promoting the strategies and best practices of these companies, the Canadian apparel and textile industries program will help other companies acquire the tools they need to build and sustain a competitive advantage.
Britex which was in my riding was an example of such a company: niche market, high technology, very good workforce, but a large capital investment that it had to sustain. We will come to that later. We should use the example of Britex so that no other companies and no other communities suffer what that community has suffered. People who had worked nowhere else and who depended on that business to provide for their families have seen it disappear. Hopefully, initiatives will mean that there will be a reprise or a takeover of some of those assets to continue operations within those communities.
Another point is we have committed to making the remaining $6.5 million in funding from the company component of the Canadian apparel and textile industries program more readily available to companies when they take initiatives in advance of the removal of the apparel and textile quotas by January 1, 2005, if that is to happen. We ask the minister to consider that carefully and to consider carefully the recommendations of the report.
We have committed to identify and reduce tariffs on imported textile inputs used by the Canadian apparel industry so as to improve the industry's cost competitiveness. This initiative will amount to an approximate value of $26.7 million to the apparel industry over the next three years. These tariff reductions will generate an ongoing reduction in duties paid beyond the first three years.
We have committed to improve the competitiveness of Canadian textile companies through a new three year $26.7 million textiles production efficiency initiative. This program is currently being implemented by Industry Canada.
A further point is to continue to work through the national initiatives component of the Canadian apparel and textile industries program to address the technology support, branding, trade development and e-commerce needs of the apparel and textile industries.
All of these together respond to what was raised by the member of the Bloc Québécois on what we should be doing to modernize our industry and to ensure its competitiveness as well as that of our workforce and its security.
These initiatives and investments are still key to the future success of these industries in the global trading environment and their continuing contribution to the health of the Canadian economy. Therefore, it is also important to mention some of the steps the government has taken that have contributed to the dramatic rebirth of these sectors as competitive high tech innovators.
A competitive tax system is critical to fostering business investment in Canada. Investment supports economic growth and job creation. The Canadian textile and apparel industry has demonstrated clearly that with more and better equipment embodying the latest technology workers are more productive. Increased investment and higher labour productivity in turn leads to increased employment, higher wages and a higher standard of living.
The importance of improving the competitiveness of the tax system has been underscored in recent years by reductions in corporate tax rates in many of our major trading partners. The Government of Canada is presently taking measures to strengthen the Canadian tax advantage for entrepreneurs and businesses. These measures build on the five year tax reduction plan introduced in 2000, the largest tax cut in the country's history aimed at promoting investment and entrepreneurship within the country.
Supporting our businesses through tax reductions and other measures remains paramount to establishing a world-class marketplace. The Government of Canada actively promotes entrepreneurship through its competitive tax system aimed at supporting businesses of all kinds, small, medium and of large.
Budget 2004 identified small businesses as a key source of innovation and job creation and announced measures to help support this essential sector of our economy. The new capital loss carry forward period has been extended to 10 years, making it easier to weather the first and most difficult years of business. The government is also working with business, under an government electronic tendering system, to improve and reduce the costs of applying for government procurement opportunities.
Finally, the government is teaching businesses how to reduce the paper burden and get it right the first time to avoid duplication. For larger businesses with incomes in excess of the small business deduction limit, the five year tax plan reduces the 28% general corporate income tax rate down to 21% in 2004.
I would like to remind the House that Canadian businesses have a federal-provincial corporate tax rate more than two percentage points lower than the average U.S. state federal rate. Canadian businesses can look forward to the elimination of the federal tax completely by 2008. Compared to the U.S. equivalent, Canada also provides small businesses with significantly lower corporate tax rates than the U.S. on income above $50,000 U.S. or approximately $60,000 Canadian.
One area where the tax system has an important impact on new investment, particularly in capital intensive sectors like the textile industry, is the treatment of capital assets. Businesses use capital assets over a number of years. The capital cost allowance system determines how much of the cost of a capital asset a business may deduct in a particular year. CCA deductions are generally determined by assigning a rate of class of assets, and then applying the rate to the non-depreciated balance in the class to determine the allowable deduction for that year.
As a general principle, capital cost allowance rates should reflect the useful life of assets and thus provide adequate recognition of capital cost over time. The alignment of CCA rates with the useful life of assets can enhance productivity and standards of living through a more efficient allocation of investments across classes of assets.
In need of a segue perhaps, in the 2004 budget the government announced two changes to CCA rates, which have improved the environment for investment in Canada. First, we have made it easier for businesses to purchase computer equipment by increasing the CCA rate for computer equipment to 45% from 30%. Second, we have raised the rate for broadband, Internet and other data network infrastructure to 30% from the previous 20%.
As we know, using improved technology, increases productivity and competitiveness. This translates into greater demand for goods and services and for more new jobs, in other words, greater competitive advantage. These changes will allow firms to write off these investments more quickly, thereby ensuring that the tax system provides an appropriate environment for investment. The attractive environment for business investment in Canada has resulted in the Canadian textile industry investing over $300 million annually in state of the art textile equipment and facilities. Over the last decade, that represents $3.1 billion in investments in our country.
These capital expenditures contributed to an increase in labour productivity in this sector in the 1990s. While Canada is not a textile machine manufacturing country, textile machinery embodying the latest technological improvements produced worldwide is readily available to domestic manufacturers that must continuously reinvest to remain internationally competitive.
The hon. members may be assured that the concerns of the textile and apparel industries are very much on the government's agenda right now. In fact, the Minister of Finance recently met with a number of representatives from the apparel industry. Our government recognizes that increased competition from abroad represents a serious challenge for Canadian textile and apparel industries. For this reason, we are working closely with these industries to assist them in adjusting to the globalization of the textile and apparel markets.
The government's commitment is to support entrepreneurship and businesses through the pursuit of a competitive tax system alongside clear strategies for gaining the competitive advantages evidenced by the priority placed upon the apparel and textile industries in Canada. Our response to the finance committee report will no doubt reinforce our efforts to ensure that these industries remain world leaders.
I spoke of the energies that we spent in the programs that we have developed to work hand in hand with the industry to ensure its competitiveness in the future. We must also remember where it has not worked. We must remember where there has been a loss of industry. I remember when Domtex, Dominion Textile, went out of business in Yarmouth. It was an incredible loss to the community of some 500 jobs. We must ensure that we reduce the possibility of that ever happening in other places.
Britex developed its competitiveness, its high technology product and delivered worldwide to other manufacturers. People who had invested their whole lives in that industry lost their jobs. It was devastating to those communities. Bonda Textiles has found its competitiveness reduced compared to imports internationally.
No government program can guarantee the success of any industry or business. However, we must ensure that we bring them as close as possible or give them the potential to survive. Therefore, I think the minister will look seriously at the recommendations of the committee, and I will encourage him to do that. I was part and parcel in the drafting of those recommendations. I would encourage him to implement those or something that would be even better for the industry.
Mr. Speaker, we welcome the motion and I thank the member for bringing it forward. As his colleague just said, it is very timely.
The member who just spoke said that it was very timely but that we had to look at all aspects. However I fail to understand why the government has not acted on the three recommendations which, as I understand it, were unanimous. Government members supported it and it was reported by the member who is now the Parliamentary Secretary for the Minister of Public Safety who did an incredible job. I do not understand why the government is not implementing it.
I want to state that we do support the implementation of these recommendations and, just for the record, I will read them into the record for the benefit of people who are following this debate.
The first recommendation reads:
That the federal government immediately extend, for a further seven years, the duty—remission orders covering the apparel sector that are set to expire on 31 December 2004.
That obviously makes one understand the necessity of acting upon this recommendation right now.
The second recommendation reads:
That the federal government immediately end tariffs on inputs which are not produced domestically. Textile producers seeking continued tariff protection should be required to establish that they sell their products to Canadian apparel manufacturers.
Again, that recommendation was supported by the Conservative Party.
The third recommendation, which is more of a broad recommendation, reads:
That the federal government immediately undertake a study of temporary adaptation measures to enhance competitiveness, as well as the benefits and costs of eliminating tariffs on imports of fabric for use in the Canadian apparel sector, the types and quantities of products produced by the Canadian textile industry and the practice of tariff differentiation on fabrics based on their end-use. The results of this study should be tabled in Parliament no later than 31 January 2005.
That indicates why the immediacy and why the timeliness of this specific motion. It is because of the importance of this industry and the fact that this industry does need these issues addressed very quickly. This report was tabled in the House in April, 2004 and it still has not been acted upon. The Minister of Finance says that he is meeting with the sector, which is a good thing, but the government should be acting on a report that its own members supported. The reason that it should act is because of the importance of the industry.
The apparel industry is the 10th largest manufacturing sector in Canada. It has more than 93,000 employees working in over 3,900 establishments that account for 2% of Canada's total manufacturing gross domestic product, 4% of the manufacturing investment and 4.4% of total manufacturing employment.
The industry critic for our party has gone across the country and has met with different manufacturing councils and the Manufacturing Council of Edmonton. What these people have said, over and over again, is that the federal government simply has to recognize the challenges facing their industries and their manufacturing industry in particular. As we went around the table in the room in Edmonton, on average these companies had been in existence in the Edmonton region for about 45 to 47 years. That means they have put roots down in the community and are investing in their businesses in the communities. They have a real stake in how the country is run, both economically and in government. We need to recognize that and ensure there is a climate surrounding these industries that enables them to grow and to thrive.
I do want to use the opportunity of the motion to raise some other challenges facing the apparel industry. The industry raised a lot of concerns with us prior to the election. In response to those concerns, we wrote the then minister of industry on May 21, 2004 but we did not get a response, which one can understand with the election. However we hope the department will respond to this issue.
What the letter addressed were some of the other issues facing the industry beyond the duty remission orders. One of the specific issues the industry raised had to do with the government's program for the import of garments from least developed nations. I wanted to identify this for the record because the industry supports this initiative. This initiative is for the federal government to provide duty free and quota free entry for imports of textiles and clothing from 48 least developed countries.
The industry supports the intent and the goal of that program and it thinks the initiative is sound, but it feels that the manner in which the government has implemented the program is unfair and has caused serious harm to its industry. The program has not just helped the truly poorest of nations, which the industry supports, but has in fact provided a comparative advantage to nations that have a large manufacturing sector.
I should at this time, Mr. Speaker, inform you that I will be splitting my time with the member for Kildonan—St. Paul.
On the LDC issue, under the rules of origin, up to 75% of the X factory price of garments made in the least developed country can be of non-LDC materials from general preferential tariff countries. The problem is that these countries include China, Korea and India. As we well know, those countries are turning into economic powerhouses and will become our main competitors.
When I was in Beijing in November 2002, I noticed more cranes than one could imagine, at least 20 cranes on either side of the street. Beijing has a very dynamic and growing economy and it is competitive, and in our party's view it should not be in the same category as the least developed nations.
We believe it is unfair for countries like China, Korea and India, which have huge and sophisticated textile and clothing industries, to be receiving assistance from Canada against our own industries.
The rules of origin deprive the LDCs of any incentive for foreign investors to establish textile manufacturing facilities in our country, investment that would lead to long term employment and advancement opportunities for the people who need it the most. This does not actually accomplish the program's goal, which was to establish some manufacturing facilities in the poorest nations so they could then raise themselves out of poverty.
The rules also relegate the LDCs to clothing assembly, and only as long as they remain the cheapest source of labour in the world by paying the lowest wages in the world, and that is unfair. This is not the objective of the program either. What happens is that an assembly will be set up there with the lowest wages but once the wages get a bit higher it can then be transferred to a nation that has lower wages. The lowest common denominator is obviously not the objective of the program.
We asked the minister in May 2004 to amend the LDCs rules of origin to require that products made in LDC countries would be eligible for benefits under the program only if they were made from LDC or Canadian inputs. In addition, we recommended that an appropriate and effective least developed country specific safeguard mechanism be instituted to deal with import surges.
We asked the government to respond to that in May but it has not yet responded. The biggest concern raised by member of the NDP was the fact that the industry needed a response and that the unanimous report with three solid recommendations should be implemented now.
The third recommendation hinted at some broader issues facing the textile industry. One dealt with least developed countries. However there are a couple of other issues that we think the government can act upon, for instance, dealing with the U.S. government and insisting that all NAFTA partners not be excluded from trade deals that are being negotiated with third countries. I think that is a fair and reasonable request by this industry, and fair under the rubric of the NAFTA agreement. I hope the Prime Minister raises that today with the president in stressing the importance of this industry.
Another recommendation was the implementation of an outward processing program for Canadian textile companies to actively try to export and support this industry and to take a sensible approach to textile tariff policy that does not damage the industry, which is what the committee recommended.
I hope the government will act upon this committee report.
I will digress a bit from this topic. It strikes me as odd, in this minority government, that the government does not act upon committee reports that have been fully supported. This example of the report dealing with the textile industry was supported in April 2004 and the Government of Canada can and should act upon it.
However there are other issues. The industry committee prepared a report well over two years ago on foreign investment restrictions for telecommunications companies and cable companies. It was supported by the Liberals at the time and by the two legacy parties of the Conservative Party. There are 135 Liberals and 99 Conservatives in this place, which is more than enough to pass any motion.
I encourage the government, in the spirit of a minority government and in a spirit of this dynamic Parliament, to work with other parties on as many reasonable issues like this as it can. I strongly encourage the government to act immediately. This industry needs action and it needs answers now, not after December 31 when these tariffs run out. I encourage the Minister of Finance to act on the recommendations proposed by the finance committee.
Mr. Speaker, I would like to put some comments on the record that I feel are very important. The member for Edmonton—Leduc did a great panorama and detailed synopsis of the reasons why it is very prudent in this day and age, right now in November 2004, to ensure that these recommendations are pushed through and action is taken.
I want to go over one aspect that has not been touched on at great length. As members know, duty remissions, which underpin Canada's apparel industry, are set to expire December 31, 2004. As a result of this, employment decisions have to be made. The apparel industry is the 10th largest manufacturing sector in Canada and because of this point, we can see quite readily how this is going to impact on families all across our nation.
More than 93,000 employees, working in approximately 4,000 establishments, are employed and are counting on this employment to bring bread to the table. The apparel industry accounts for 2% of Canada's total manufacturing GDP and 4% of manufacturing investment, as well as 4.4% of total manufacturing employment. So this is a very critical issue.
The president of the Canada Apparel Federation told the committee that this industry draws on a large range of skills, including technology employment suitable for some entrance to the Canadian labour force. In urban areas, where the industry is concentrated, entry level jobs enable these apparel companies to play an important role in socializing new entrants into the Canadian workforce. These entry level workers develop their language, their work skills, and confidence that allows them to move into more skilled jobs here in Canada.
This infringes on what I believe to be a very important statement that we make to the immigrants of our country. I just signed 58 letters in Kildonan—St. Paul for new immigrants to my riding who are very thrilled to be in the country. I must say that none of them are in the exotic dancing industry. Having said that, these are people who are employed in the garment industry. These are people who are looking forward to advancement in Canada and the kinds of decisions that are made in the halls of the House reflect on the everyday lives of new immigrants to Canada.
We have to look at what is happening right now. We are coming close to the Christmas season. If we look at the statistical studies across Canada during Christmas time, even though it is a joyful time for many people, it is not so joyful for those people who are looking at losing their jobs because of the slowness of the government on this issue. It is not so joyful to those families who are wondering if they can afford to have Christmas dinner.
With all due respect, the Prime Minister has been away on a world tour and we hear on a daily basis how he drops into one country on one day, climbs on the jet and drops into another country on another day, and makes wonderful photo ops and wonderful press releases, all having to do with what he feels his treasured words do to these countries. I would like to bring forward that it is more prudent in this day and age for the Prime Minister to be here in Canada at this time when we have critical legislation and decisions that have to be made that impact on Canadians and on immigrants coming to our country in a major way.
We on this side of the House stay in touch with Canadians. We care about what happens to them. I am very much in support of this motion. As we look at this more closely, I would implore members opposite to ensure that they address this issue in a very speedy manner so that families, who are waiting to hear what is going to be happening to their jobs and how it is going to impact on their families, will be able to rest assured that they will have employment.
Mr. Speaker, in the two minutes I have left, I will repeat that I am in support of the motion by the hon. member for Winnipeg Centre. I appreciate that we have all party support on this. Now we all have to work together, of course, to convince the Minister of Finance to do the right thing.
The issue of the employees, which other hon. members have raised today, has been of concern to me. As I said earlier, we introduced a program for older workers because we need to work with the provinces, for instance, and I will give one very specific example in my riding. Most of it is high tech now. This industry is not labour intensive but high tech, yet especially on the apparel side there are still newly arrived immigrants who are working in this industry.
We need to have two programs, then, one for those who can no longer be recycled. In my opinion, the PATA program introduced by this government has to be introduced earlier, as I have said. At the same time, as the industry becomes more high tech, we have to look at what other types of programs we are going to introduce for those workers who are newly arrived in this country and may not have the skills. I actually have raised this issue with the minister of labour of Quebec. We must have programs.
I will give members another example. In regard to the high tech part of it, a lot of the business people in my riding need trained personnel. There used to be one high tech program, especially in the needle trade. Unfortunately none of the students finishing high school and who may not want to go to professional schools are actually entering this program. We have to encourage this and work with the textile resource institute to get young people to actually find a future in this industry. It is nice to have these machines, but if no one can program them then there is no future.
What I want to say in the last few seconds I have left is that I have worked with this industry for a long time, as have the government, the Minister of Finance and the former ministers of finance. The reason the former minister of finance, now the Prime Minister, put in the seven year period in terms of the duty remission was to help this industry. We have to do the same thing again, in my opinion.
I also want to say that on November 22 I had the pleasure of announcing, along with the Minister responsible for the Economic Development Agency of Canada, the CANtex program to help the textile industry. There are things happening and there are things we have to do, but we have to do more. It has to be a multi-faceted approach.
It also has to be an approach to open new markets, as I said. In terms of what is going to be in front of the committee on international trade today, the apparel and textile industries will be presenting some recommendations to see how we can help those two industries find new markets for our products. We have very good and competitive products. In my opinion, we have to be more protectionist, like the Americans, of our industry and we have to encourage a north-south type of market, perhaps, instead of looking to Europe or Asia where we are not competitive at all.
We have to assist the ministers, especially the Minister of Human Resources and Skills Development, to reallocate new sources of funding for those senior workers who will lose their jobs because this industry is becoming more technologically advanced. At the same time, as I have said, we have to look at what other tools the industry needs in order for us to be able to assist it.
My time is up. I support the hon. member's motion. I will continue to work with my colleagues from the Beauce and Scarborough Centre and the minister involved.